Michaels v. Breedlove

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
12-8-2004
Michaels v. Breedlove
Precedential or Non-Precedential: Non-Precedential
Docket No. 03-4891
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"Michaels v. Breedlove" (2004). 2004 Decisions. Paper 93.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 03-4891
____________
GEORGE E. MICHAELS;
ROBERT G. LEWIS,
Appellants
v.
HOWELL A. BREEDLOVE; JAMES E. HOWE; CARL A. SNYDER,
Trustees of J&L Structural, Inc. Defined Contribution Pension Plan;
KEN W. BIXBY; M. EDWARD MURPHY; CARL A. SNYDER,
Trustees of J&L Structural, Inc. 401(k) Profit Sharing Plan
Defendants/Third-Party Plaintiffs
v.
CONGRESS FINANCIAL CORPORATION; BOETGER & ASSOCIATES, INC.;
STONECIPHER, CUNNINGHAM , BEARD & SCHM ITT, P.C.;
DELOITTE & TOUCHE; ARTHUR ANDERSON LLP
Third-Party Defendants
____________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 02-cv-00597)
District Judge: Honorable Maurice B. Cohill, Jr.
____________
Submitted Under Third Circuit LAR 34.1(a)
December 7, 2004
Before: RENDELL and FISHER, Circuit Judges, and YOHN,* District Judge.
(Filed : December 8, 2004 )
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OPINION OF THE COURT
____________
FISHER, Circuit Judge.
Appellants George E. Michaels and Robert G. Lewis appeal the District Court’s
dismissal of their complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6). For
the reasons that follow, we will affirm.
Appellants are retirees of Chapter 11 debtor J & L Structural, Inc. (“J&L”). They
sought to redeem their vested J&L pension and 401(k) benefits. The trustees of J&L’s
pension and 401(k) plans (“Trustees”) directed that checks in the amount of Appellants’
vested benefits be deposited in J&L’s operating bank account. J&L issued checks to
Appellants in late June 2000, contemporaneous with the filing of its Chapter 11
bankruptcy petition on June 30, 2000. J&L’s bank refused to honor the checks given the
pendency of the bankruptcy. Appellants expended their own resources prosecuting
proceedings seeking recovery of their benefits; they ultimately prevailed.
Appellants then brought the instant action against the Trustees, claiming that the
Trustees breached their fiduciary duty under § 409 of the Employee Retirement Income
*
The Honorable William H. Yohn, United States District Judge for the Eastern
District of Pennsylvania, sitting by designation.
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Security Act (“ERISA”), 29 U.S.C. § 1109, by depositing the checks with J&L, and
seeking reimbursement of the attorney’s fees and costs they incurred in recovering their
benefits under § 502 of ERISA, 29 U.S.C. §§ 1132(a)(1)(B), (2), (3) and (g). The District
Court dismissed Appellants’ complaint for failure to state a legally sufficient claim.1
The District Court properly exercised jurisdiction pursuant to 29 U.S.C. §
1132(a)(1)(B), (e) and (f) and 28 U.S.C. §§ 1331 and 1337. We have jurisdiction under
28 U.S.C. § 1291. Appellants contend that they are entitled to recover their fees and costs
under § 502(a)(3)(B), which permits plan beneficiaries to seek “other appropriate
equitable relief” to redress ERISA violations. But the Supreme Court rejected this
construction of § 502(a)(3)(B)’s “equitable relief” provision in Great-West Life &
Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002). The Court in Great-West began
by noting that regardless of how styled, claims seeking money damages fall outside the
ambit of “equitable relief”:
“Almost invariably ... suits seeking (whether by judgment, injunction, or
declaration) to compel the defendant to pay a sum of money to the plaintiff
are suits for ‘money damages,’ as that phrase has traditionally been applied,
since they seek no more than compensation for loss resulting from the
defendant’s breach of legal duty.”
1
The Trustees filed a third-party complaint asserting claims under ERISA against
Defendants Congress Financial Corp., Boetger & Associates, Stonecipher, Cunningham,
Beard & Schmitt, P.C., Deloitte & Touche and Arthur Anderson LLP. Various of these
Defendants filed cross-claims against one another. The District Court granted these
Defendants’ motions to dismiss for the same reasons it granted the Trustees’ motion to
dismiss, and therefore further denied as moot all additional motions between and among
the Defendants concerning the third-party complaint and cross claims.
3
Great-West, 534 U.S. at 210 (quoting Bowen v. Massachusetts, 487 U.S. 879, 918-919
(1988) (Scalia, J., dissenting)). The Court went on to distinguish between “legal
restitution” and “equitable restitution,” explaining that
In cases in which the plaintiff “could not assert title or right to possession of
particular property, but in which nevertheless he might be able to show just
grounds for recovering money to pay for some benefit the defendant had
received from him,” the plaintiff had a right to restitution at law through an
action derived from the common-law writ of assumpsit. .... In such cases,
the plaintiff’s claim was considered legal because he sought “to obtain a
judgment imposing a merely personal liability upon the defendant to pay a
sum of money.”
Id. at 213 (citations omitted). Equitable restitution, on the other hand, refers to recovery
of money or property which “could clearly be traced to particular funds or property in the
defendant’s possession.” Id. (citations omitted). In order to recover the kind of equitable
restitution that might be available under § 502(a)(3), an “action generally must seek not to
impose personal liability on the defendant, but to restore to the plaintiff particular funds
or property in the defendant’s possession.” Id. at 214.
Piercing through the labels Appellants use to describe their requested relief reveals
that they seek no more or less than reimbursement for the attorney’s fees and costs they
incurred while attempting to recover their pension benefits. As Great-West makes clear,
such relief falls outside the category of “equitable restitution” which might be recoverable
under § 502(a)(3)(B).
4
Appellants argue alternatively that they are entitled to attorney’s fees and costs
under § 502(a)(1)(B) and (g). 2 Section 502(a)(1)(B) is plainly unavailing to Appellants –
not only does their action not fall within the categories of actions detailed in the
provision, but we have explicitly held that § 502(a)(1)(B) does not create a private cause
of action for breach of fiduciary duty. See Haberern v. Kaupp Vascular Surgeons Ltd.
Defined Benefit Pension Plan, 24 F.3d 1491, 1501 (3d Cir. 1994).
Section 502(g) is equally unavailing. It provides for recovery of fees and costs
incurred in an action brought under ERISA. But Appellants seek recovery of the fees and
costs they incurred in prosecuting the proceedings in the Bankruptcy Court under the
bankruptcy code. These proceedings were not initiated “under” ERISA. Appellants
complain that the only reason they had to prosecute the underlying proceedings in the
Bankruptcy Court and under the bankruptcy code was the Trustees’ wrongdoing, and that
therefore the Trustees should not be permitted to invoke the plain language of § 502(g)
limiting the recovery of attorney’s fees and costs to those incurred in ERISA actions.
This contention amounts to an argument that we should rewrite or simply ignore the plain
language of § 502(g). The statute’s language is clear and we must follow it. Appellants’
attempt to recover under § 502(g)(1) is therefore without merit.
2
Section 502(a)(1)(B) enables a plan participant or beneficiary “to recover benefits
due to him under the terms of his plan, to enforce his rights under the terms of the plan, or
to clarify his rights to future benefits under the terms of the plan[.]” 29 U.S.C. §
1132(a)(1)(B). Section 502(g)(1) permits courts to award the reasonable attorney’s fees
and costs incurred in “any action under this subchapter[.]” Id. at § 1132(g)(1).
5
Finally, Appellants suggest that they are entitled to fees and costs under common
law estoppel principles. The Supreme Court has made crystal clear, however, that
because ERISA is a “comprehensive and reticulated statute,” there is a strong
presumption “that Congress did not intend to authorize other remedies that it simply
forgot to incorporate expressly[,]” and courts should therefore be “reluctant to tamper
with [the] enforcement scheme embodied in the statute by extending remedies not
specifically authorized by its text.” Great-West, 534 U.S. at 209 (citations and internal
quotation marks omitted). We see no reason to override this presumption here and
recognize some broad common law claim in circumvention of ERISA.
For the foregoing reasons, we will affirm the judgment of the District Court.
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